본문으로 바로가기

World Economy Brief

Publications

To list

20 Years of the Korea-China Economic Relationship: Retrospect and Prospect

  • Author PilSoo Choi, Suyeon No, Min Suk Park
  • Date2012-10-15

▶ Korea-China trade passing through the initial growth period (1992-1997), adjustment period
(1998-2001), and second growth period (2002-2005), is now passing through its fourth phase, the
stabilization period (2006-present). Although the scale of trade has increased, there is limited
accessibility of Korean exports into the Chinese domestic market while processing trade still takes
large share.
- In the case of Korea’s trade with China, there is a strong connection with investment in China as an investment dependent
export structure. However, following from the recent strengthening of local procurement by Korean business subsidiaries
in China, there has been a decrease in the export inducement effect through investments.
- Despite Korean shares in the Chinese import market holding second place after Japan at 9.6% as of 2011, shares in
the domestic market are lower at 6.3% following Japan (11.3%), the US (9.1%), and Germany (7.5% in 2010).


▶ Korea’s investment in China, passing through the exploratory period (1989-1991), entrance period
(1992-1997), adjustment period (1998-2001), growth period (2002-2008), and transition period
(2009-present), has been diversified both in industry and region. However, there has been a recent
decline.
- After China’s admission to the WTO, the goals of Korea’s investment in China has changed from low-wage toll processing
to the domestic market. In regards to industries, there has been a gradual transition from early light industries to heavy
chemical industries, as well as a recent increasing focus on service industries.
- In order to energize recent inactive investment, there is a need for policies that work to (a) cooperate to expand pioneering
investments into the domestic market and (b) move the existing bases of production to the inland mid-western regions
that are still needed by toll processing businesses, (c) establish and utilize new Korean industrial complexes, or (d) support
the small and medium-sized enterprises which have business items to invest in China.

▶ There is an emerging need by both Korea and China to create a paradigm of mutually beneficial cooperation
by concluding the FTA and uncovering new cooperative fields.
- The reduction of tariffs and overcoming of barriers to entrance into the service industry, through the Korea-China FTA,
can provide significant momentum for advancement into China’s domestic market.
- In the finance and monetary area, Korea-China cooperation has not yet reached a level of real economy, however, in
the future, if there is an increase in the international use of the RMB and a lowering of the barriers to the Chinese
financial market, there will be a great increase in the possibility of actual cooperative endeavors.
- In Korea’s 17 future growth engine industries and China’s 7 strategic industries, because of the abundance of overlap,
there is a need to make a specific cooperative strategy according to areas where the two countries have its own strength
and where the two countries experience comparative disadvantage in the world market.

File

Prev Next List

공공누리 OPEN / 공공저작물 자유이용허락 - 출처표시, 상업용금지, 변경금지 공공저작물 자유이용허락 표시기준 (공공누리, KOGL) 제4유형

대외경제정책연구원의 본 공공저작물은 "공공누리 제4유형 : 출처표시 + 상업적 금지 + 변경금지” 조건에 따라 이용할 수 있습니다. 저작권정책 참조